In the Oil game, Russia has the longest suit to play

Logistic decline plots may be misleading when the production profile has been affected by political events. Nevertheless, Figure 1 shows a logistic decline plot for Russia’s conventional production. The result is in line with Russian estimates of their ultimate recoverable reserves of conventional oil and the proportion produced to date. The logistic decline plot assumes no change in technology. It accounts for future conventional discoveries but does not account for a new play type that has not been hunted before such as shale oil.

Figure 1: Russia Logistic Decline Plot

Production usually starts declining once a country has produced more than 50% of its ultimate recoverable reserves. Russia’s production decline was delayed by the turmoil of the 1990s. Assuming that Russia’s conventional oil production is on the cusp of decline and that decline rate is 6% per annum, Figure 2 shows what that decline will look like to 2040. At 6% per annum decline, Russia’s conventional reserves will be exhausted by the end of the century.

Figure 2: Russia Production Profile of Conventional Oil 1930 – 2040

Russia’s shale oil resources are potentially enormous. The best source of information on this is a U.S. Geological Survey Report:

As at 2003 and as estimated by the USGS, the West Siberian Basin had discovered reserves of 144 billion barrels of oil and more than 1,300 TCF of gas. The assessed mean undiscovered resources are 55.2 billion barrels of oil, 642.9 trillion cubic feet of gas, and 20.5 billion barrels of natural gas liquids. Most of the undiscovered conventional reserves are assumed to be in stratigraphic traps. 90% of the reserves are thought to be sourced from the Bazhenov Formation.

The Bazhenov Formation is an Upper Jurassic unit deposited in a deep marine environment. It is 25 to 50 metres thick over the centre of the basin, where it is also in the upper part of the oil window of source rock maturation.

Figure 7 is from page 12 of the Ulimshek report. It is an isopach map of the Bazhenov Formation. The green blobs are oilfields within the Bazhenov.

Figure 8 is from page 8 of the Ulmishek report. From the centre of the basin in a transect through Surgat, it shows the Bazhenov Formation and the prograding deltas that built over it in about 400 metres of water. The relevance of this cross-section is that it illustrates the deep marine environment that the Bazhenov Formation was deposited in. The Bazhenov Formation is 2,500 metres deep in the area of this cross-section, so there is another 2,000 metres of sediment on top of what is shown in this figure.

Figure 16 is from page 23 of the Ulmishek report. It shows the total organic carbon content (TOC) of the Bazhenov Formation. Most of the central part of the basin has TOCs over 7% with some large areas over 11%. By comparison, the oil generative part of the Bakken has a TOC of 18% in outcrop where it is immature and 11% within the oil window, with the difference due to expulsion of oil in the latter. There are 45 feet (14 metres) of generative shales in the Bakken. So the Bakken and the Bazhenov Formations are very similar in generative potential per cubic metre of rock, with the Bazhenov being twice as thick.

Figure 17 is page 24 of the Ulmishek report. It is a map of the vitrinite reflectance of the Bazhenov Formation. The green is marginally mature and the oil window is shown by grey and brown. Combining the data from Figures 7, 16 and 17, there is a sweet spot for the shale oil potential of the Bazhenov Formation the centre of the West Siberian Basin that covers about 800,000 square kilometres.

The Bazhenov Formation is particularly favourable for shale oil development.

Consider these passages from the Ulmishek report.

“The Bazhenov Formation commonly is 20–40 m thick; locally the thickness increases to 50–60 m. The formation covers an area of almost one million square kilometers and contains about 18 trillion tons of organic matter (Kontorovich and others, 1997).” – page 22

“The organic matter in the Bazhenov Formation is derived from plankton and bacteria. The TOC content averages 5.1 percent over the entire formation (Kontorovich and others, 1997). In a large central part of the basin, TOC is higher than 9 percent, and in many analyzed samples it is higher than 15 percent.” – page 22

Unconventional reservoirs in fractured Bazhenov shales are poorly understood. The shales are commercially productive in the Salym and adjacent fields (Greater Salym area), where nearly 200 wells were drilled into the Bazhenov Formation and the reservoir rocks are best studied (fig. 15). No significant commercial production has been established in other areas of the Bazhenov-Neocomian TPS, although oil flows were tested in many wells. The conventional analytical measurements of porosity and permeability in cores do not reflect properties of the shale rocks at reservoir depths because of fracturing induced during drilling and lifting of the cores (Dorofeeva and others, 1992). Well logs also are unable to identify reservoir intervals in the formation (Klubova, 1988). Indirect estimates of porosity of productive reservoir rocks in the Greater Salym area vary between 5 and 10 percent. Porosity is related to leaching of silica from radiolarians (Dorofeeva and others, 1992), transformation of montmorillonite to illite (Klubova, 1988), or to both processes. Permeability of the shales results totally from fracturing, although the volume of fractures is small compared with the pore volume. Horizontal fracturing strongly dominates over fracturing in other directions. In some instances, the fracturing is so intense that the rocks cannot be cored. The fracturing was originated by hydrocarbon generation and related increase of pore pressure (Nesterov and others, 1987).

Oil produced in the Greater Salym area from fractured self-sourced reservoirs of the Bazhenov Formation contains little or no water, as bottom water in conventionally producible pools is absent. Productive wells commonly alternate with dry wells. Only about 20 percent of drilled wells are commercially productive, another 20 percent are dry, and the rest of the wells produced noncommercial or marginally commercial oil flows (Dorofeeva and others, 1992). During the last 25 years, only about 20 million barrels of oil were produced from the Bazhenov reservoirs of the area (Shakhnovsky, 1996). Oil pools are strongly overpressured; the reservoir pressure in the Salym field is 1.7 times higher than the hydrostatic pressure. At a depth of 2,700 m, the reservoir pressure is as high as 50 MPa (7,250 psi) (Matusevich and others, 1997). Laterally, the magnitude of overpressure commonly changes from well to well. The hydrodynamic connection commonly is absent even between neighboring producing wells. Nevertheless, a limited number of wells have been producing hundreds of barrels of oil per day for more than 5 years. Maximum original yields of wells were as high as 40,000 b/d; however, in most cases yields decreased abruptly in a short period of time, probably because of collapse of the reservoir rocks with decreasing pressure (Nesterov and others, 1987).” – pag26

In comparison to that 40,000 BOPD figure from a vertical well, in 2010 Brigham Exploration had announced that it had completed 39 consecutive high-frac-stage long-lateral Bakken and Three Forks wells in North Dakota with an average early 24-hour peak flow back rate of approximately 2,777 barrels of oil equivalent.

Can we quantify the potential? Let’s assume that in that 800,000 square kilometre sweet spot each square kilometre of Bazhenov Formation averages 25 metres thick with a TOC of 10%. That amounts to 2.5 million cubic metres of organic carbon per square kilometre. If the yield to liquids is 30%, that amounts to 0.75 million cubic metres or 4.7 million barrels. At 10% recovery, that in turn yields 0.47 million barrels per square kilometre. The total for the sweet spot is thus 378 billion barrels, and there is possibly a third as much again outside the sweet spot. The central Bazhenov could maintain Russia’s current production rate of about 10 million BOPD for over 100 years. By comparison, the Canadian tar sands have reserves of the order of 177 billion barrels – about half as much.

What does this mean geopolitically? The very high tax rate on the Russian oil industry funds the Russian State and its adventurist policies. In 1904, J.H.Mackinder developed the heartland theory in geopolitical analysis. In 1919, he summarised his theory as “ Who rules East Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island controls the world.”

The sweetspot of the Bazhenov Formation is in the centre of Mackinder’s pivot area, where the “V” of PIVOT is in the map above. The Bazhenov Formation will be literally fueling forays from the Heartland for decades to come. To the east of Russia, China has about one trillion tonnes of recoverable coal which could make 2 trillion barrels of liquid fuels using the Fischer Tropsch process. To maintain comparative advantage against that combined flood of fluid, a good nuclear technology will be required.

There is so much oil in the world that if the free market would operate then it would cost more to deliver it to customers than to mine and refine it. Without monopoly control oil would be cheap as dirt. We are all suckers.

Some questions:
1. “Ultimate recoverable reserves” is a meaningless expression. Reserves are recoverable, but the quantity changes according to a complex interaction of cost, price, technology, and recording requirements. So how does anyone know what is “ultimate.”
2. How does one know when 50% of the ultimate recoverable reserves are reached when reserves are added every year?
3. Recovery factors for depletion drive fields are at about 10% under primary recovery conditions. How are we going to get 10 percent from the Bazhenov? What about 2-3%? (Exploitation is very expensive: Go back to question 1.)

I wonder how much conflict will arise from Russia competing with the Arab nations for oil dollars. Could Russian support of Muslim troublemakers decline? I suppose one has to keep the friends one has, or find new friends.

russian state adventurist? I have more confidence in the stability and good sense of the Kremlin than any incumbent of the Whitehouse and the competing powers of the military industrial complex or religious sensibiliites (jewish or fundamental christian) behind them.

“As at 2003 and as estimated by the USGS, the West Siberian Basin had discovered reserves of 144 billion barrels of oil and more than 1,300 TCF of gas. The assessed mean undiscovered resources are 55.2 billion barrels of oil” You have used “reserves” and “resources” in the same para. Which are you talking about? To quote Ivanhoe “resources are what you develop with other people’s money. Reserves are what you might try to develop with your money” The USGS quoted Bakken resources at about 100x what are now considered reserves.

at a daily consumption of 80MMBBL/Day, the world consumes 29 billion barrels per year. 144 billion barrels is 5 years worth. Then it’s gone. The number sounds large, but as pointed out above, not all can be economically recovered (if it costs more energy to recover than you produce, why bother?), and the rate of production will likely be quite low particularly for the bakken-type regions and shale-oil.

“Logistic decline plots may be misleading when the production profile has been affected by political events.”
“The logistic decline plot assumes no change in technology.”
“It accounts for future conventional discoveries but does not account for a new play type that has not been hunted before such as shale oil.”

ExxonMobil struck an accord with the Russian government-owned oil company Rosneft earlier this year to begin joint oil exploration efforts around the country in areas where Rosneft lacks the technical expertise to access oil reserves.

Forbes reports that the shale play in Siberia, known as the Bazhenov play, has been a major target for international energy companies for decades, as the source of the massive conventional oil reserves in the region. In all, it covers an area roughly 80 times that of the massive Bakken shale play that has played such a crucial part in rejuvenating the northern Plains states.

At this point, explained ExxonMobil’s chief executive officer Rex Tillerson, the company still will need to conduct several years of exploratory drilling to determine the nature of the deposits.

“There is huge shale potential in shale rocks in West Siberia … we just don’t know what the quality is,” Tillerson told Dow

Why do all peak oil decline graphs start at the current year and immediately start declining? I first read about peak oil in 2006-2007 and the graphs I saw then showed the same thing — an immediate substantial fall off in production. However, here we are in 2012 and that elusive peak is still just off in the future.

It’s coming! I promise…just a little while longer — it’ll be here..just wait. How many years do we have to listen to this? If I predicted the peak production of our most important natural resource every year for 30+ years, I would be right eventually too. As always, market forces of supply and demand will determine the price and consumption rate of oil. If oil ever does become in short supply, prices will rise and viable alternatives will begin to be priced into the market. The price rises we’ve seen in recent years might or might not be a sign of this, however, I tend to believe they have been caused more by regional instability, devaluation of the dollar and speculation.

I doubt that Russia is in a production decline. I’ve seen too many stories for too many places about imminent production decline – and they never pan out. Of course it has to happen eventually, but I’m not expecting anything serious anywhere for the next 20 or 30 years.

Not only did they misunderstand the economics and the power of entrepreneurialism, they were far too pessimistic on the march of technology under those twin banners.

Five years ago, the US was supposed to be out of natgas – then came 4d-surveying, steerable horizontal drilling and fracking. That same technology is helping change the productive arithmetic in liquid hydrocarbons too – check out the US numbers on productoin, imports, and exports.

Far from the old plea about no new big oil discoveries in years, what actually happened was that there were few incentives to look when oil was at its cheapest ever in real tersm (as recently as 1998) which was itself a testminoy to the failure of the Malthusians and the triumph of the innovators.

We are not short of hydrocarbons: we keep finding more of the stuff everywhere we look – as well as finding out new ways to extarct it from where we’ve already been looking and drilling – and we keep improving the economics of usinhg those discoveries, too.

HCPlenty. …… Five years ago, the US was supposed to be out of natgas – then came 4d-surveying, steerable horizontal drilling and fracking.
————————————————–

Peak oil is real, HCPlenty, but it is difficult to gauge when the peak of the graph will be reached. Any finite resource will have its era of peak flow – that is a given truth.

Norway, for instance, is well past ‘peak oil’ already. And no amount of horizontal drilling will ever give them that peak back. New technology may delay the decline, but they will never reach a new peak. Likewise the UK is well past ‘peak oil’ – all the big, easy oil fields have already dwindled to nothing, and the new fields are thin and expensive slices in comparison.

Oh, yes, fracking will gives us all another boost, but that is not oil. Gas will help our total energy supply, but not with transport energy requirements.

.

The nub of the ‘peak oil’ debate is that world energy demand is increasing relentlessly, while energy discoveries are getting harder and smaller by the year. That is not an energy-future we should be planning. That is why we need nuclear energy and nuclear research to grow in line with our energy demands (preferably Thorium nuclear). Fossil fuels are a finite and rather messy energy supply, and we need to move ever closer to a fusion-based energy supply. We are not quite there yet, but we will never get there unless we turn away from 20th century fuels and invest in nuclear research.

The Industrial Revolution was not built on coppicing and charcoal. Have you ever been to Ironbridge, where the Industrial Revolution started? They understood that we had already reached ‘peak tree’ back in the 18th century, and took the bold decision to look for new energy supplies. Had they not, we would still be stuck in the Medieval Age.

Likewise, we need to look forward to the Nuclear Age. We nearly got there back in the 1970s, but then the Greens and Environmentalists came along and destroyed everything, like they always do. We listen to hair-shirt Luddites at our peril. For mankind as a whole, it is Nuclear Age or bust.

And don’t forget that 10% of the cost of every barrel of Middle Eastern oil we purchase, comes back to the West as terrorism and divisive fundamentalist education. So you pay for the oil, and then you have to pay again to clear up the political and social mess that fundamentalist religion makes in the West.

The faster we move away from fossil fuels, the safer our cities and airports will become. Ever been stuck in an airport security-screen queue?? That is actually a Middle Eastern oil queue, not a security queue. No oil, no terrorism – its as simple as that.

Good analysis. Well done, a difficult subject expressed clearly.
BTW:
I’m looking at some onshore, low productivity oil clastics right now. I’m shocked at the cost of completions I’m seeing. What the well costs would be for these Russian reserves, I shudder to imagine.

You can always get a molecule of oil or gas out of the ground. Despite our best attempts, however, we are not getting any oil or gas at less of a $/molecule now than we did before. A lot of the value in these difficult reserves is eaten up in the process of getting them.

@ John Mann: I’ve published the 22 tier-1 estimates of global URR or EUR (economically ultimate recoverable) annually since 2004. The avg is presently 4,174 billion barrels. Production thus far has been 1,293-Gb. 50-Gb is added by the sector each yr. 32-Gb is lost to annual consumption. For every $1/barrel increase in crude price, another 22-Gb is added to URR/EUR. As such, URR has doubled since 1995 mainly due to previously uneconomic fields and unconventional resource coming of interest.

@ gareth: y-axis is annual production/cumulative production. Annual updates of these “linearizations” for global all liquids, conventional, saudi arabia and several unconventional streams can be viewed on one linearization chart at my website: http://trendlines.ca/free/peakoil

@ Jerome: McPeaksters (promoters of the imminent peak oil myth) are just another cult following with an agenda for us all to live like mennonites or the amish.. 15 of the 22 tier-1 practitioners who conduct annual estimates of URR/EUR also have models for oil depletion. Their consensus avg infers peak oil will be 97-Mbd in 2027 (89 today). Chart is updated monthly at my website (click my name).

Peak Oil stories/scares have been around almost since the industry got going. There’s an excellent book by Daniel Yergin – The Prize – which charts the turbulent history of discoveries, price swings, politics, etc.. It is a litany of booms and busts which often had major consequences. For example, one of the bigger scares triggered the Germans’ development of synthetic fuel, at huge cost, whereupon massive new fields were found in the US and the Middle East.
An observation by an oilman, years ago, has stuck in my memory. We already know exactly where to find 2 to 3 times the amount of oil that the whole world has consumed to date. It is, of course, still in the fields which provided that oil because we have only been able – so far – to extract a fraction of the reserves. Human ingenuity can be expected to improve that record, given the need and/or incentives.

@Freddy Hutter: Is the increase in URR and EUR monotonic since 1995? Doubled, huh? What happened when the price of oil dropped down from $147/bbl? How about inflation adjusted?

I do not quite see the utility of URR or EUR estimates, but perhaps as SWAGs they are helpful.

(“Peak oil” is a term that means to me some date perhaps one or two hundred years into the future when oil consumption–not production–begins a permanent decline because a much cheaper and better source of fuel, chemicals, pharmaceuticals, etc is readily available. Even now natural gas is a renewable fuel, though, Baltimore Gas and Electric produces some of its electric power with landfill gas. Maybe gas and oil will always be the fuels and raw materials they are today.)

Shale oil changes everything! In the US the Green River Formation is estimated to have 1.5 trillion barrels of recoverable oil, roughly equivalent to the World’s current proven oil resources. Bazhenov is estimated to have 1.9 trillion barrels of recoverable oil. Just two filelds have potentially TRIPLED the world’s oil reserves!

If these reserves pan out then it should do to oil prices what fracking did to natural gas prices in the US. No more expensive and risky deep sea drilling in the Gulf or the Arctic. Far fewer supertankers will be needed as most fuel will be available locally. No more reason to get involved in the Middle East.

I am sure other oil shale formations will be found around the world. Fossil fuel is likely to become so abundant that it will have little commercial value – it will be what you do with it that matters.

There is an old saying in computer programming: GIGO. Garbage In Garbage Out. It doesn’t matter if a program has 100 or 10000 pages of code or any level of superficial sophistication if the input data, the input assumptions, are wrong. The same applies in much other analysis.

This is an unjustified assumption: “assuming that Russia’s conventional oil production is on the cusp of decline”

The subsequent graph based on that assumption merely lends an illusion of superficial sophistication. Fancy graphics, like computer programs, are only as good as the assumptions they are implicitly based upon.

A similar fallacy should be familiar to skeptics of CAGW: for CAGW, extreme peak oil claims, peak uranium, peak phosphorus, and so on tend to be based on variants of it. See:

The assumption “assuming that Russia’s conventional oil production is on the cusp of decline and that decline rate is 6% per annum” corresponds to ~ 12% decline in 2014, a couple years from now, compared to now. We will be able to look back and see if that happened. (At least, though, that is refreshing variety from when some less honest and instead cunning make predictions of effects 20-100 years away on almost anything from peak phosphorus to CAGW: just soon enough to cause worry but just long enough away to fail only once they are retired).

“Some comets contain “massive amounts of an organic material almost identical to high grade oil shale,” the equivalent of cubic kilometers of such mixed with other material;[79] for instance, corresponding hydrocarbons were detected in a probe fly-by through the tail of Comet Halley during 1986.[80]”
“[79] ^ Dr. A. Zuppero, U.S. Department of Energy, Idaho National Engineering Laboratory. Discovery Of Water Ice Nearly Everywhere In The Solar System http://www.neofuel.com/zuppero-1995-water-ice-nearly-everywhere-114647.pdf
[80] ^ Huebner, Walter F.(Ed) (1990). Physics and Chemistry of Comets. Springer-Verlag. ISBN 3-540-51288-4”

Since everyone knows abiogenic oil theory is doubleplusungood (in the West anyway although not so much in Russia which by curious coincidence happens to be the largest and most successful producer of oil now), when shall we mount a search for dinosaurs or ancient vegetation on deep space comets? Just kidding. ;-)

@ John Mann: My site has a chart (urr growth vs consumption) showing annual additions to URR. The avg pace was 136-Gb/yr from 1995 to 2011. It illustrates the pace (using 3yr ma) attained 410-Gb/yr in 2008 but has since fallen off to nil.

Oil depletion projections require a best efforts estimate of URR to construct a production profile to exhaustion. At this time, the PS-2500 model forecasts all liquids will exhaust in 500 years and only BTL (biofuels to liquid) sourced fuel will serve demand. It uses an 8.0-Tb URR which includes CTL (coal), GTL (gas) & Kerogen.

This model agrees with your sentiment of a DEMAND PEAK by projecting consumption will level off @ 98-Mbd and commence terminal decline upon USA contract crude oil exceeding $187/barrel in 2022. This Peak Demand Barrier is a definitive crude-cost/GDP ratio which when surpassed stymies new monthly global demand records. This has occurred three times since 2008.

@ anticlimactic: Shale oil and recoverable oil from Kerogen total approx @200-Gb. You appear to be confusing recoverable oil with OOIP (original oil in place). Global OOIP is approx 15-Tb of which only 8 will be recoverable using today’s economics and technology. Regular conventional oil has an avg 35% recovery rate, albeit Aramco claim they can squeeze out 55% in certain formations.

Most oil depletion models predict Russia production will peak around 2020. Please remember the article chart is for conventional only … not all liquids which is 10.7-Mbd (compared to 11.4 Saudi Arabia).

I disagree. Most fields are solution gas drive with heterogeneous reservoirs: poor permeability profiles. I would think that even with EOR projects RFs in the upper teens would be the highest attainable economically. Yates and possibly Burgan have the kind of reservoirs to deliver high RFs, but they are at the far right of the curve.

Unless, of course, reserve additions come without a commensurate increase in OOIP reporting?
Explain, please, how typical fields can average 35%.

The Bazhenov is an interesting play. David notes pressure differentials between adjacent wells but not structural differences which implies sealed faulting, isolating wells and limiting reserves. Long laterals would fix the problem if the Russians were technically up-to-speed. So the multinational oil companies will have to come in on some production sharing contract basis and show them how to do it. Then the Russians can run them off like Kaddafi did to Hunt in Libya, and Chavez did to Exxon. And the Russian reserves will work out fairly close to what David has estimated.

russian state adventurist? I have more confidence in the stability and good sense of the Kremlin than any incumbent of the Whitehouse and the competing powers of the military industrial complex or religious sensibiliites (jewish or fundamental christian) behind them.
_______________________
Sure you do.
Like Andrew Young said- Castro brought stability to Cuba, right?

However, the people of South Ossetia, Uzbekistan or Ukraine might disagree with you.
Ever been to the Czech Republic? How about Hungary, Lithuania, Latvia, Estonia, Romania, Albania, or maybe, Poland?
You might find some number of people who disagree with you in those places.

I find your comment beyond the pale, but less than unique- more’s the pity.
Pravda has a special place for you.

@Freddy Hunter: Simply put, production is measured and OOIP is estimated. Reported RFs are different from actual. Also, I wonder if many recovery factors are projected from water floods expected to have 100% sweep efficiency, displacement, and vertical conformance; something, I have no doubt, that has not yet occurred for any giant or super giant field.

“Shale oil changes everything! In the US the Green River Formation is estimated to have 1.5 trillion barrels of recoverable oil, roughly equivalent to the World’s current proven oil resources. Bazhenov is estimated to have 1.9 trillion barrels of recoverable oil. Just two filelds have potentially TRIPLED the world’s oil reserves!”

False. There is no recoverable oil in the green river formation, because there is no oil there. it is kerogen and has to be cooked to make oil, making that deposit have a negative ERoEI. it also has to be mined because kerogen cannot flow.

The general misconception about peak oil persists. peak oil is not about what’s in the ground, never has been. peak oil is about flow rates and ERoEI. Russian shale oil production will be too low to keep up with depletion from conventional sources, Example, Saudi export of oil is expected to drop to zero within 20 years because of drowning domestic demand (they burn oil for power) coupled with decline from aging fields.

Good exploration technology came very late to USSR because centrally planned economies don’t do this well – not guided by economics and best technology. The first major pipeline builders in wildnerness regions of USSR came from Calgary, Alberta (Trans Siberian? Sorry I can’t locate a reference quickly but I remember the news item from years ago). There can be little doubt that major finds remain to be found in Russia and this “decline” is premature to say the least.

EROEI is commonly used to be misleading. Anyone focusing on it tends to be a red flag. For example, actually a “negative EROEI” or more precisely an EROEI under 1 is not necessarily a devastating indictment of something. A rechargeable battery has an EROEI less than 1, but that does not prevent beneficial use often in portable applications, despite a joule from a battery costing more than a joule from the power line used to charge it. Better than EROEI claims is to look at cost figures, which come from and implicitly take into account far more than energy alone, in the process indirectly rather recognizing than a joule of one type of energy (e.g. coal or nuclear thermal power) is not identical to a joule of another type (e.g. oil):

Present domestic prices:

gasoline, thermal energy content =~ $27 / gigajoule*

gasoline -> mechanical energy at driveshaft of a vehicle = more than $100 / gigajoule

nuclear thermal =~ less than $4 / gigajoule-thermal as an upper limit for a 35% efficiency plant producing $11/GJ-electrical.

Gasoline and other liquid hydrocarbon fuels (e.g. diesel fuel) cost an order of magnitude more than some other energy sources per joule. Such is one reason why basically zero U.S. electricity generation occurs fueled by oil, aside from a few portable generators. It is also why, for example, contrary to a common claim, fertilizer is generally not made using oil as the energy source but rather natural gas and in some places coal (although such as N2 + 3H2 -> NH3 with the help of externally supplied energy, heat, can be done with any energy source, whether fossil fuel or not).

Domestic natural gas prices went much down due to the shale gas boom, compared to a few years ago, with now natural gas being as cheap as coal per joule, although both figures are approximate national averages with local prices of each varying.

Actually, aside from distribution issues if there are not CNG refueling stations locally, fuel costs can be far less for a vehicle running on natural gas than one running on gasoline. There are around 15 million natural gas fueled vehicles globally, predominately in third-world countries.

Okay, you’ve done a number of these USGS-dependent posts on oil resource assessments. Maybe it’s time now to do some for the U.S. where the USGS did not see the current oil booms coming in unconventional shale plays in Colorado, Kansas, and before them in south Texas and before that in North Dakota. Resource assessment models are no match for tech shifts in drilling and the move from models based on vertical drilling success rates in basin traps to stratabound shale plays. You and the USGS could at least start by acknowledging that the implications of the shift from conventional to unconventional plays are radical, i.e. risk reward relationship, open endedness, and changing rate of productivity enhancement compared to conventional field development. Holding any of these assumptions constant from one modeling framework to another is misleading.

“EROEI is commonly used to be misleading. Anyone focusing on it tends to be a red flag. For example, actually a “negative EROEI” or more precisely an EROEI under 1 is not necessarily a devastating indictment of something.”

False, Negative ERoEI is just that, negative. For example, if it takes 2 joules of energy to get back one joule of energy, you have LOST 1 joule of net energy, hence you are in the negative, Same as if you spent 2 dollars to make a produce which you can only sell for 1 dollar. Your Monitary Return on Monitary Invested is negative.

What you are referring to is when you put in one joule and get back 1.1 joules. That is still positive but a pathetic return.

“False, Negative ERoEI is just that, negative. For example, if it takes 2 joules of energy to get back one joule of energy, you have LOST 1 joule of net energy, hence you are in the negative, Same as if you spent 2 dollars to make a produce which you can only sell for 1 dollar. Your Monitary Return on Monitary Invested is negative.

What you are referring to is when you put in one joule and get back 1.1 joules. That is still positive but a pathetic return.”

EROEI = Energy Return On Energy Investment = energy return / energy investment. For putting it 2 joules from one source (energy investment) to get out 1 joule from another source (energy return), it would be 1 / 2, which is 0.5, not -1. More importantly than semantics though:

A challenge for you: Which is more cost and value?
1) 2 joules of natural gas or coal at ~ $2.50/GJ present typical U.S. prices
or
2) 1 joule of gasoline at $27/GJ present market price and value

Ask the subprime banks how their investment wasn’t a negative. You are dividing, when you should be subtracting. Then it is negative. ERoEI isn’t a ratio, it’s a net return, which is negative when you put in more than you get back. A deficit.

Doesn’t matter about the costs. modern society was built on a Posative net energy, substantial positive. Once society goes into a net energy loss, economic growth is impossible. NG may be cheap now, I but it won’t stay there. Shale gas operated are already feeling the low price and are starting to hold back, 10 years from now will look a lot different.

One may add that usage of a system with an “EROEI” below 1 is done with every power plant. For instance, a typical nuclear power plant’s generators converting thermal energy to electricity have around 0.35 joules of electricity produced for every 1 joule of thermal energy. In the way you have written, you would call that a negative EROEI, although, since the EROEI is defined as (energy return) / (energy investment), it equals for the power plant’s generators 0.35 / 1 and thus 0.35. The reason an EROEI below 1 can be fine (what you would call a negative EROEI) is because different types of energy are not equal in value.

1J of electricity can be worth more than 1J of thermal energy.

1J of gasoline can be worth more than 2J of coal, natural gas, nuclear thermal power, etc.

That is completely different. You are referring to the net energy in fuel that is able to be utilized . ERoEI isn’t that. It has to do with how much energy we must PUT into a system to get the energy out. For example, if you have to hunt for your food and it takes all day to get the food for one say, you are breaking even. What you are referring to is the available energy in the meat from the hunt. ERoEI is now much energy you have to expell to do the hunting. If it takes you three days to hunt for one day of food you starve.

jrwakefield says:
June 12, 2012 at 11:38 amThat is completely different. You are referring to the net energy in fuel that is able to be utilized . ERoEI isn’t that. It has to do with how much energy we must PUT into a system to get the energy out.

In the 35% efficient generator system example, you must put 1 joule of energy into the system to get 0.35 joules out, when converting from one energy type to another. The former was 1 joule of net energy available from the fuel as thermal energy, which could have been used instead locally to heat buildings through distribution of steam if we didn’t want electricity more.

In that case, the energy types are thermal and electrical.

In the case of heating oil shale, the situation is also converting from one energy type to another: going from thermal energy (optionally nuclear) to practically portable stored chemical energy.

It is your “[EROEI] has to do with how much energy we must PUT into a system to get the energy out” … whether the conversion is nuclear thermal -> oil (chemical energy), or whether it is nuclear thermal -> electrical energy.

Synthetic liquid fuel is in a way like a charged battery. One may, for instance, use a nuclear power plant to charge the batteries of an electric car or use it to heat kerogen in shale to produce oil indirectly used to fuel cars.

The “hydrogen economy” many propose (not me but as an example) is the same idea. Hydrogen isn’t a net energy source, not for such as producing hydrogen from water. It is an energy carrier. It doesn’t have to be a net energy source.

(While there are also methods involving burning part of the shale oil in place, I’ll skip the side topic to keep this simple).

Where there is net energy can be elsewhere. For instance, a tiny fraction of a terajoule of energy in mining operations can be used to obtain a kilogram of uranium or thorium, in turn giving tens of terajoules energy return. Each kilogram fissioned releases the equivalent of around 18 million times its mass in TNT chemical explosive (18 kilotons), albeit more gradually in reactors than in nuclear bombs. The payback relative to what was expended in mining is enormous. In fact, current reactors are getting by not even bothering to use 99+% of the energy in mined uranium, mainly just fissioning part of the U-235 which is 0.7% of the original natural uranium, but, if it was ever really much of a need, breeder reactors are an available and tested technology.

“The preceding reserve figures refer to the amount of thorium in high-concentration deposits inventoried so far and estimated to be extractable at current market prices; there is millions of times more total in Earth’s 3 * 10^19 ton crust, around 120 trillion tons of thorium, and lesser but vast quantities of thorium exist at intermediate concentrations.[74][75][76] Proved reserves are “a poor indicator of the total future supply of a mineral resource.”[76]

In event of a thorium fuel cycle, Conway granite with 56 (±6) parts per million thorium could provide a major low-grade resource; a 307 sq mile (795 sq km) “main mass” in New Hampshire is estimated to contain over three million metric tons per 100 feet (30 m) of depth (i.e. 1 kg thorium in eight cubic metres of rock), of which two-thirds is “readily leachable”.[78] Even common granite rock with 13 PPM thorium concentration (just twice the crustal average, along with 4 ppm uranium) contains potential nuclear energy equivalent to 50 times the entire rock’s mass in coal,[79] although
there is no incentive to resort to such very low-grade deposits as long as much higher-grade deposits remain available and cheaper to extract.[80]”

jrwakefield says:
June 12, 2012 at 11:28 am
“Ask the subprime banks how their investment wasn’t a negative. You are dividing, when you should be subtracting. Then it is negative. ERoEI isn’t a ratio, it’s a net return, which is negative when you put in more than you get back. A deficit.”

Quite a number of Russian geologists don’t buy into the fossil fuel theory. For at least 50 years, they’ve been studying and seeking/finding oil based on an anaerobic theory in which crude oil is produced naturally by the earth.

I’m a political scientist (ha! there’s another misuse of the word science), so the fact that I think an anaerobic theory makes way more sense than the belief that I fill my gas tank with refined dead dinosaurs really doesn’t mean much.

If the Russians are right, who knows how much oil there is left in the earth’s crust? Anyone know about the anaerobic crude oil theory?

Society is like a predictor, it commutes energy. In a biological preditor population they will go after the easiest, less effort, prey first. High ERoEI. Once the preditor population exhausts that prey, they are forced to go after harder, less bountiful prey, and take more effort to do that. Lower ERoEI. Eventually, as the predictor population grows, and they need more energy, they eventually exhaust even the low return harder to get prey, and go into a deficit situation (expending more energy than they get in return from the prey, negative net energy, the same as accountings loss). The preditor population then crashes.

This is a thermodynamic fact that all biological populations must endure.

In the 1960s the net energy returned from oil fields was some 100 units, today that net return has dropped to 24 units on average. The Alberta tar sands is only 6 units for every one they consume. A number of studies puts societys threshold at 3/1. Soon as we go below that for our net energy returned society starts to starve.

The nuke solution for the green river keroge is to set off nukes underground to cook the kerogen into oil. Now does that sound like a viable solution to energy aquirment , or an act of desperation?

“Quite a number of Russian geologists don’t buy into the fossil fuel theory. For at least 50 years, they’ve been studying and seeking/finding oil based on an anaerobic theory in which crude oil is produced naturally by the earth.”

The abiotic theory of oil formation has been well debunked. For one thing, not one oil fileld has been shown to NOT have a biological source, include every Russian field. Every oil field has chemical markers which point to the biological source rock. Plus many of the components of oil show similar structures to lipids.

The other problem with abiotic is that even if it did occur, which it cannot because of the Oil Window, it would not produce oil faster than we consume it.

“Eventually, as the predictor population grows, and they need more energy, they eventually exhaust even the low return harder to get prey, and go into a deficit situation (expending more energy than they get in return from the prey, negative net energy, the same as accountings loss). The preditor population then crashes.

This is a thermodynamic fact that all biological populations must endure.”

No, there is no net negative energy production for civilization as a whole (which is quite different from the EROEIs for charging flashlight batteries, car batteries, or other subsectors of the whole). I already mentioned, among other possible examples, that even the average crustal rock contains fissionables with energy equivalent to 25 times the mass of the entire rock in TNT. For average granite, available in still practically infinite amounts, that figure is the equivalent of 50 times its mass in TNT. Even for the lesser amount of uranium extractable from seawater, Dr. Cohen remarks:

“We thus conclude that all the world’s energy requirements for the remaining 5×10^9 yr of existence of life on Earth could be provided by breeder reactors without the cost of electricity rising by as much as 1% due to fuel costs. This is consistent with the definition of a “renewable” energy source in the sense in which that term is generally used.

His paper assumes extraction of uranium from seawater at the rate of 16 kilotonnes (35×10^6 lb) per year of uranium. The current demand for uranium is near 70 kilotonnes (150×10^6 lb) per year; however, the use of breeder reactors means that uranium would be used at least 60 times more efficiently than today.”

“This is a thermodynamic fact that all biological populations must endure.”

No. Among other examples, there is no rule of physics which implies artificial energy production must stay its current few TW total (with 2 TW electrical) ratio relative to the 200,000 TW of sunlight intersected by Earth or the 400,000,000,000,000 TW output by the sun.

jrwakefield says:
June 12, 2012 at 1:41 pm
“A number of studies puts societys threshold at 3/1. Soon as we go below that for our net energy returned society starts to starve.”

Do you realize, for instance, that every single study about a hydrogen economy from nuclear power and/or renewables is based on using what is an energy carrier, not an energy source, of under a 1/1 ratio for the transportation sector? There is no net energy gain making hydrogen from water, only some inefficiencies, but that’s not at all a showstopper in itself, though. Net energy gain comes elsewhere, such as for the power plants themselves.

Personally I would favor synthetic fuels other than hydrogen, but it works as an example.

Members of the McPeakster fraternity (like Richard Wakefield) use EROEI as a straw man argument. Nobody but nobody has ever suggested developing negative EROEI projects. As discussed upthread, URR & EUR are by definition only economically feasible developments using today’s price and technology. This definition validates 8,043 billion barrels of reserves … which will take 500 years to produce and consume. Only then do we start on those “negative EROEI projects” Wakefield says are a waste of time and energy…

The question is: Who exactly will be enriched by these potential reserves? The Russians are currently headed for a demographic debacle — their birthrate has plunged well below replacement level and many who should be in their productive prime die early due to alcohol related causes. Nevertheless, the population is aging. If and when these reserves are proven there may be none left to develop them but the pensioners.

“Members of the McPeakster fraternity (like Richard Wakefield) use EROEI as a straw man argument. Nobody but nobody has ever suggested developing negative EROEI projects. As discussed upthread, URR & EUR are by definition only economically feasible developments using today’s price and technology. This definition validates 8,043 billion barrels of reserves … which will take 500 years to produce and consume. Only then do we start on those “negative EROEI projects” Wakefield says are a waste of time and energy…”

I always find it entertaining when people can know what the furure will be, X amount of oil IS going to be pumped, and WILL last Y years. So precise too 8.043TB of reserves, yet not one field on the planet is known what it will ultimately produce until the last drill rig leaves the site,

Entertaining also is the calculation. We currently consume 33BB per year. Times 500 years at this consumption rate is 16 Trillion barrels. Thus you are admitting that for the next 500 years consumption will be BELOW current consumption, ergo, we are at peak oil now (peak oil being the point of maximum flow rate). This is in spite of the fact that China and India, to reach the same per capita consumption as the US, would have to increase consumption by FOUR TIMES. So you are admitting the future will be less oil consumption than today.

But what this really shows is the lack of understanding of compound growth. Since the beginning of the oil era, oil consumption has grown, accelerated, by 2% per year. 2% per year growth has a doubling period of about 35 years. The last 100 years of the oil era has had 2 doubling periods. The last doubling period of growth contains the same volume as all the previous doubling periods combined. That means in the next 35 years we would consume the same amount of oil as the previous 100 years combined.

So far we have consumed almost a trillion barrels. That means in the next 35 years we would consume another trillion, for an accumulated consumption of 2 trillion. In 70 years, an addtional doubling period, would have an accumulated consumption of 4 trillion, and in the next 100 years, 3 more doublngs, we would have a combined consumption of 8 trillion. Thus at current growth rates your 8 trillion barrels of resevers would be exhausted in 100 years, not 500.

But of course you are ultimately correct. Current oil in the ground is going to last 500 years, actually last forever as far as humans are concerned, because we won’t be able to extract it. Hell, a pending economic collapse would put an end to hard to get oil as capital funding would dry up.

Richard Wakefield: Presently my PS-2500 model suggests the waning growth rate in oil consumption since 2004 (OECD peak 2005) will ultimately result in a transition to terminal decline in 2022. Albeit favourable oil intensities are in play in many nations, the main forcing is ever rising crude price (avg 1%/month). Global demand is actually stymied at a definitive crude-cost/GDP ratio I discovered in October last year. There have been several minor encroachments of this Peak Demand Barrier since 2008. New monthly consumption records resume upon predictable retreats in crude price.

Using projected USA contract crude prices from my Barrel Meter model, I have high confidence Peak Oil will occur when the PDB is permanently surpassed in 2022. At that juncture PDB is represented by $187/barrel and production will have increased to 98-Mbd (89 today). All Liquids will decline at an avg pace of o.3% per annum, hence the 500 yr time frame for exhaustion of EUR.

“The question is: Who exactly will be enriched by these potential reserves? The Russians are currently headed for a demographic debacle — their birthrate has plunged well below replacement level and many who should be in their productive prime die early due to alcohol related causes.” WRONG. Outdated data, which was boosted for geopolitical reasons so The Atlantic and The Economist‘s twit editors (Ed Lucas is a particular embarassment) could tell us Russia didn’t matter anymore and the U.S./NATO could bomb their allies from Serbia to Syria with impunity.

Russian births actually exceeded deaths a year or two ago for the first time since the collapse of the USSR. Then there’s immigration, the fact that the Russian Federation has taken in more immigrants than any other nation save for the U.S. Now that all the Russians who were going to come back from the ‘Stans and Baltic states were they felt distinctly unwelcome have come back, they’re letting in more Indian and Chinese immigrants. Go to Moscow and see for yourself. The future of global modeling is going to be half Indian-half Russian leggy brown skinned models with green eyes. And futute D.C. administrations are going to learn to ignore the noisy remnants of the anti-Russia lobby leftover from the Cold War. They are simply going to be pushed aside by the oil men, as well as the space exploration and nuclear energy lobbies all of which want Russian expertise and shared markets (i.e. India/China).

Abiotic oil theory has NOT been debunked, as the assumptions about what are ‘biological’ markers are wrong or at least could be wrong. Some of those ‘biological’ markers have been found at the bottom of the ocean under thousands of PSI pressure next to sulfur vents from the spreading sea floor that are hardly conducive to life as we know it. And abiotic oil theorists never said that oil was an unlimited resource, only that it comes from non-biological sources and has been found by test wells drilled to depths under the Earth where geologically bacteria/or seabed remnants should not exist, i.e. past the Cambrian level.

” as the assumptions about what are ‘biological’ markers are wrong or at least could be wrong. Some of those ‘biological’ markers have been found at the bottom of the ocean under thousands of PSI pressure next to sulfur vents from the spreading sea floor that are hardly conducive to life as we know it. And abiotic oil theorists never said that oil was an unlimited resource, only that it comes from non-biological sources and has been found by test wells drilled to depths under the Earth where geologically bacteria/or seabed remnants should not exist, i.e. past the Cambrian level.”

[sigh]. Example, the Tupi field off Bazil. The source rock is just below the host rock. (google: tupi geology) The source rock is clearly biological, with lots of marine fossils, thousands of feet below and resting on the basalt basement rock. How did life live so far down? Simple sedimentary geology. You fail to understand that what is currently deeply burried was not when it was a shallow marine sea, such as off Brazil when the Atlantic was opening up 200myo. The world of today is nothing in appearence and sedimentary sequence of the past 200myo. It gets burried over time.

I don’t place too much weight on models that predict the future, otherwise the dot-com bubble would not have happened, nor the sub-prime. The fly in the ointment is that deeply indebted nations won’t be able to afford oil at any price, and growing countries like India and China will absorb what the west can’t afford to consume. Hence peak oil won’t be felt evenly around the world at the same time. For some it will come hard and fast, like as soon as Greece leaves the Euro and they have to pay 4 times the current price for oil because of their currency value collapse.